Jason Leopold

Ex-Enron Exec Wants Federal Money for Energy Project

Beware. This could be your tax dollars at work. The federal
government may guarantee hundreds of millions of dollars in loans to
help a former energy executive who publicly admitted he had no idea
that the division he once ran cooked its books, and who is now trying
to secure funding for a new energy company he started with three
ex-colleagues.

Yes, Thomas White, the former vice chairman of Enron Energy
Services and one-time Secretary of the Army, is back in the energy
business and this time he's looking for a handout. He's the one who
testified before the US Senate more than two years ago that he was
clueless about the tactics his employees used to manipulate
electricity prices in the California power market, in addition to the
massive losses EES -- under his leadership -- hid in an effort to
keep its parent company, Enron Corp., temporarily afloat.

(Full disclosure: I spent a year investigating White and wrote a
lengthy news story in August 2002 that tied Thomas White to the fraud
at Enron, specifically that he was aware the division he ran was
hiding losses and that he instructed an underling to cover up losses
from a particular energy contract. The story, published by Salon.com,
was removed two months after it was posted because a single email I
obtained proving the allegations was called into question by
right-wing journalists and the White House. I was discredited and
falsely accused of plagiarism by Salon. To this day, not one reporter
has ever followed up on the story or has proved the email wasn't
authentic, despite the fact that two years after the story was first
published the allegations, detailed in a federal indictment against
former Enron CEO Jeff Skilling, proved true.)

The energy bill that's currently making the rounds through the
Senate contains a provision that provides federal loan guarantees for
"a project to produce energy from coal ... mined in the western
United States ... and offers the potential to sequester carbon
dioxide emissions and ... shall be located in a western State at an
altitude greater than 4,000 feet," the energy bill states.

According to the watchdog group Public Citizen, White and his
business partners are trying to secure funding for a project to
produce energy from coal in Wyoming, specifically, "a $2.8 billion
coal gasification project in Medicine Bow, Wyoming. The coal will be
supplied from Arch Coal mines neighboring the power facility; it will
stuff carbon dioxide emissions into oil wells; and the facility will
be located in a western state (Wyoming) at an altitude above 4,000
feet."

But when contacted about the possibility of funding an energy
project run by a person such as White, whose business acumen is
questionable at best, an aide to Sen. Ken Salazar, D-Colo., who was
responsible for drafting the language in the energy bill, became
alarmed and claimed the text in the energy bill was written
specifically to fund an energy project proposed to lawmakers by
executives with Minneapolis-based Xcel Energy, PacifiCorp in Portland
and, possibly, a third unnamed company. Salazar wouldn't comment on
the specifics of the proposal because he said it hasn't been publicly
announced by the companies.

Yet Public Citizen's Tyson Slocum said in an interview that the
language in the energy bill is "very broadly written and could very
well accommodate other energy proposals" including Thomas White's new
project.

Slocum said he is concerned because he has heard that White has
been actively lobbying lawmakers to try to get loan guarantees for
his new energy venture.

"Salazar and the energy committee is saying that the language
that's written in the bill is not intended to fund White's project
but White's company does qualify because of the way the bill is
written," he said.

It's been two years since Secretary of Defense Donald Rumsfeld
fired White. Since then, White has kept busy writing a book,
preparing his $15 million Florida home that's for sale and quietly
getting back into the field that made him a very rich and reviled
man.

White's new endeavor, DKRW Energy (whose symbol has an eerie
resemblance to Enron's crooked E), is a joint business venture
started in 2000 by three other former Enron executives: Robert C.
Kelly, formerly the chairman and chief executive of Enron Renewable
Energy, Jon C. Doyle, who worked at Enron in an executive capacity
under Kelly, and H. David Ramm, who used to be president and CEO of
Enron Wind and was a co-managing director of Enron Renewable Energy,
according to the bios on the company's Web site. White joined DKRW
last year. The company, formerly known as DKR Development, changed
its name to DKRW after White promised his partners that his
connections to Washington, D.C., lawmakers would help the company
secure federal funding for various renewable energy projects,
according to two people who are close to White.

Interestingly, though, there's not a single reference to White's
tenure at Enron on his bio. Instead, White's bio states that he "has
11 years' experience in energy markets."

So what's he hiding?

Maybe it's the fact that the division he once ran, EES, turned
out to be largely responsible for the massive losses that contributed
heavily to Enron's bankruptcy; or that under his leadership the same
division was responsible for jacking up electricity prices in
California and creating artificial electricity shortages that
resulted in widespread blackouts. Maybe it's the dozens of calls he
made to his former Enron colleagues, a month after 9/11, while he was
serving as Army secretary, to get the inside scoop on what was going
on at the company right before he sold his stock.

It's hard to say. Neither White nor anyone at DKRW responded to
numerous calls for comment about the suspicious omission of his
former employer from his bio. But this isn't the first time White's
tried to erase the past. When White was tapped by President Bush in
May 2001 to serve as Secretary of the Army, his bio, posted on the
Pentagon's Web site, was virtually wiped clean of any reference to
Enron. White also coauthored a book with new business partner Kelly
on postwar planning in Iraq, in which his author bio listed his
two-year stint as Army secretary but failed to mention that he spent
10 years at Enron.

If White and his partners are going to be the recipients of
federal loan guarantees then taxpayers have the right to know that
they may be on the hook for hundreds of millions of dollars in loans
if White falls asleep on the job again, which he claimed was the case
with Enron.

To be fair, Kelly, Ramm and Doyle left Enron well before the
company's bankruptcy and fraudulent activities became public.
However, during Ramm and Kelly's tenure running the unit Enron Wind
and Enron Renewable, the division allegedly defrauded the government,
according to federal investigators.

A few months after Enron bought Portland General Electric in
February 1997, Enron's three wind farms -- Zond Windsystems,
Victory Garden and Sky River -- applied to the Federal Energy
Regulatory Commission for recertification as qualifying facilities.
To qualify, the farms had to be independently owned, according to a
1978 federal law.

Under that law, intended to lessen dependence on foreign oil by
cutting demand for traditional fossil fuels, FERC designates which
facilities qualify and oversees the rates that the producers charge
buyers.

Each wind farm promised FERC that Enron would transfer ownership
to partnerships that would not be affiliated with Enron. In June of
1997, FERC recertified the wind farms as qualified to sell wholesale
electricity to US utilities, having been under the impression that
Enron transferred ownership in them.

However, civil and criminal lawsuits filed in federal court in
Houston against Enron former Chief Financial Officer Andrew Fastow,
the mastermind behind the company's schemes, alleged he and other
Enron executives created special partnerships to hide the company's
stake in the three wind farms.

"Fastow and one of his subordinates, Michael Kopper, created
'Friends of Enron' partnerships to enable Enron to maintain control
over the wind farms after having ostensibly sold them to supposedly
independent 'Special Purpose Entities,'" according to an Oct. 28,
2002, report in bizjournals.com.

"The Securities & Exchange Commission has alleged that Fastow
and Kopper created off-balance-sheet partnerships to disguise Enron's
interest in the wind farms so that they could continue to receive
beneficial regulatory treatment while secretly remaining under
Enron's control."

Kelly and Hamm were never named in the government's investigation
of Enron, nor is there any evidence that either of them knew about or
took part in Fastow's wind farm schemes.

But White, on the other hand, is another story. The federal
government's indictment against Enron's Jeff Skilling lays out in
detail that the division White ran was nothing but a house of cards,
its energy contracts a sham, and that company executives misled
investors about the unit's true financial condition. And while White
testified that he stood behind the company's energy contracts, that
he was unaware of the malfeasance that went on at Enron, that he was
totally in the dark about the shenanigans at EES, a former employee
is on record saying that White knew otherwise.

In the Enron documentary, The Smartest Guys in the Room, an
ex-EES is employee recalls asking White how EES will make up for
massive losses the division suffered during a particular quarter.

"One word," the employee said he recalled White telling him and a
few other people. "California."

Jason Leopold is the author of the explosive memoir, News
Junkie, to be released in early 2006 by Process/Feral House Books.
Visit www.jasonleopold.com for updates.